Here's why Intel's CEO says they're laying off 12,000 people

Intel CEO Brian KrzanichEthan Miller/ Getty ImagesIntel CEO Brian Krzanich

On Intel’s Tuesday earnings call, CEO Brian Krzanich explained why the company is restructuring, including laying off up to 12,000 employees. Basically, the PC business is hurting, and Intel knows it has to change fast to survive.

“Intel has typically been known as a PC company,” Krzanich said. Now, it’s going to be focused around the cloud and “all connected devices that connect to that cloud….That includes the PC but much more than that.”

Krzanich said that the restructuring will give it “flexibility” to invest in the hottest areas for the otherwise slow-growing PC market:

  • 2-in-1 laptop-tablet hybrids, which are growing more than 10% per year, Krzanich said.
  • Gaming PCs, which he said are growing at a simlar rate.
  • Home gateways, including TV set-top boxes, where Intel says it’s gaining share.

And to invest in other areas outside PCs that are now “critical” to Intel’s success:

  • Datacenter
  • Internet of Things, which Intel said grew 22% year over year
  • Memory
  • Connectivity.

As a result of this restructuring, Intel said, it would reduce its spending run rate by $1.4 billion a year by mid-2017, giving the company “the highest revenue per employee in Intel’s history.”

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